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Downsizing not always up to the required goalsDOWNSIZING is a sign of a failed strategy, and should be followed by the CEO's resignation. No, this is not a Cosatu bargaining gambit. These are the words of Michel Robert, US strategy expert, author, and founder of consultants Decision Process International. His latest book, Strategy Pure and Simple II, warns of the dangers facing corporations that downsized after embracing management techniques such as total quality management, Kaizen, Kan-Ban, re-engineering and benchmarking. All these strategies are operational in nature, rather than strategic. "Downsizing by itself does not address the strategic problem that may be at the root of the organisation's difficulties," he says. Kodak, for example, shed 34 000 workers over eight years with no improvement in profits. This is because its problems were strategic, not operational, he adds. The group had diversified into pharmaceuticals, batteries and other businesses, and had lost focus of its core business until George Fisher came in as CEO and refocused the operations on photography and digital imaging.
Robert's philosophy is refreshingly simple and devoid of the anodyne language which pollutes the consulting industry. He believes company executives know the solutions to their own business problems, they often just don't realise it. "Consultants will come into your business and create a strategy for you," he says. "The next day they provide the same strategy to your competitors. A better service is to provide a methodology which enables executives to formulate their own strategy. "Many of the larger corporations are over-consulted and their decision making has been paralysed with information overload. Consultants re-engineer every process in sight, but forget about the vision." The corporate world is awash with failed business ventures and missed opportunities for want of a strategic vision. The Swiss watch industry was brought to its knees when the Japanese came out with the first Seiko digital watch, even though the Swiss had invented the technology. General Motors was never able to capitalise on the shift to smaller, more fuel-efficient cars brought on by the 1974 oil crisis, and even mighty IBM refused to recognise the advent of personal computers and the accompanying need for software. It took a Harvard School drop-out, Bill Gates, to seize that opportunity. Microsoft today has a higher market capitalisation than IBM. Gates is an exemplar of strategic thinking. "My success in business," he wrote, "has largely been the result of my ability to focus on long-term goals and ignore short-term distractions. Taking a long-term view does not require brilliance but it does require dedication. "When your business is healthy, it is difficult to behave as if you are in a crisis. This is why one of the toughest parts of managing, especially in a high-tech business, is to recognise the need for change and make it while you still have a chance." Not all strategic thinking is long-term. It concerns the company's future vision of itself and the steps needed to get there.
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